LONDON, March 5 (Reuters) - Strong global demand for oil and gas will shift in the next five years towards petrochemicals and away from motor fuels gasoline and diesel, the International Energy Agency (IEA) said on Monday.
The nation will surpass Russian Federation, the current No. 1, by 2023, the International Energy Agency estimated on Monday.
The price of oil CLc1 LCOc1 rose steadily throughout 2017 in the wake an agreement between the Organization of the Petroleum Exporting Countries and non-members including Russian Federation, to cut production by 1.8 million barrels a day beginning past year. The resurgence in US production is the most prominent change since the group's last forecast.
As a result, by 2023 the level of spare production capacity that could be used in the event of a disruption will be the lowest since 2007. However, the ensuing price recovery has "unleashed a new wave of growth from the USA", said the Paris-based IEA, which advises most of the world's major economies.
"Today's spike in the equities was a large driver behind today's (oil) price recovery", Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a report.
"Crude by rail exports are likely to enjoy a renaissance", said the IEA, as at the end of 2017 oil available for export was 310,000 barrels a day higher than the take away pipeline capacity.
In 2017, Russian Federation hit a record oil output of almost 11 million barrels per day despite its participation in a production cut agreement between OPEC and non-OPEC states. The crude oil production in the USA is now overtaking Saudi Arabia as largest exporter, reaching 10.28 million barrels per day.More news: Prayers for victim and alleged shooter day after CMU shooting
Increases in US production alone will cover 80 percent of the world's demand growth in the next three years - with Canada, Brazil and Norway covering the rest, the report said.
All that US production should keep prices at the pump from rising.
OPEC and other non-OPEC members, who are led by Russian Federation, agreed in December to extend oil supply cuts until the end of this year.
Oil ministers from the Organization of the Petroleum Exporting Countries (OPEC) and other global oil players are set to gather in Houston as CERAWeek, the largest energy industry conference, begins on Monday. The rebound, however, also spurred more drilling in the US, where operators found success in shale formations stretching from Texas to North Dakota to the Northeast.
"As Canadian shipments to the US grow, this frees up lighter USA crude for export, particularly to meet Asian demand for petrochemical feedstock", the IEA said.
Environmentalists, scientists and some energy analyst question whether the world is rapidly approaching a "peak demand" scenario as policies are enacted to reduce carbon emissions from burning coal, oil and natural gas.